A St. Louis AIDS service group that got into legal and financial problems when it hired a porn star to appear at a safe-sex event 20 months ago is at risk of going under, an audit shows.

The $1.1 million budget for the organization - funded solely by grants - could drop significantly this year. The decrease adds to the financial crunch already felt by the agency, which is operating under a new leadership and name: Regional Education Advocacy Coalition on HIV/AIDS.

This week, city officials confirmed that procedural problems disclosed in an audit last year appear to have been resolved, but concerns for adequate ongoing funding have not.

"We noted negative trends which indicate the agency may have difficulties in sustaining its current operations," reads the audit of financial records for a six-month period beginning March 1 last year.

The city comptroller's review of the group, which was then under different leadership and called Blacks Assisting Blacks Against AIDS, revealed a battery of accounting problems within the agency including:

Late filing of seven of nine monthly financial statements, some more than two months late.

Many of the problems were carryovers from the previous year before new leadership was appointed. Missed payrolls, escalated expenses and unexpected legal costs were items raised in the review as explanations of the group's money problems.

George R. Cotton Sr., the new director of the nonprofit group, said it is aggressively seeking new funding sources that will make the agency less reliant on grants. The agency, which focuses on education and outreach, reaches more than 2,800 people per year.

"The ability for REACH St. Louis to sustain itself isn't even in question as far as we're concerned," Cotton said. "Numerous grant applications have already been submitted to private and governmental foundations and we're waiting to hear back. We're also soliciting the business and medical communities. We're by no means sitting back and hoping we get lucky."

Cotton was hired in April to take over the group. His appointment came after Erise Williams Jr. was fired as executive director of Blacks Assisting Blacks Against AIDS for hiring Memphis porn star Edgar Gaines, whose movie name is Bobby Blake, to attend a safe-sex event at Williams' downtown loft.

Williams used $500 from a syphilis elimination grant to pay Gaines. The money was later reimbursed to the Centers for Disease Control and Prevention, and the unused portion of the $80,000 grant - about $20,000 - was frozen by the city Health Department, which administered the grant.

While denying claims of two former employees who said Gaines was nude and allowed guests to fondle him, Williams confirmed that Gaines did appear at the event in a towel and cowboy boots.

Williams and his former senior director, James Green, who also was fired, sued Blacks Assisting Blacks Against AIDS for back pay and were awarded $20,000.

In awarding the back pay May 14, Associate St. Louis Circuit Judge Jack Garvey said the agency was burdened with "awful record-keeping."

While it appears the record-keeping has improved for the transformed group, still unclear is where money will come from to keep the 15-year-old agency operating.

The St. Louis metropolitan area, which includes the city and 11 counties, was the hardest hit when the federal government doled out its annual appropriation of Ryan White Title I AIDS funds this month. The $4.3 million received by the St. Louis service area is $700,000 less than last year.

Last year, the Regional Education Advocacy Coalition on HIV/AIDS received $129,000 for HIV and AIDS case management from Title I. That's exactly the amount of money the planning council overseeing the Title I funds cut from case management last week when working to trim its budget.

This year, the agency has asked for $215,000 from Title I. How much local agencies will get is still being decided.

In addition to the almost certain cut in Title I funding that the agency will receive, two of the three five-year grants the agency gets from the Centers for Disease Control and Prevention in Atlanta expire within a year. There are no guarantees that the agency will have access to those dollars again. Two other federally funded, one-time grants have expired within the past two years, dropping what was once a $1.6 million budget down to $1.1 million.

The agency's board and staff have a goal of raising $1.3 million by December next year - "over and above" funding from its current CDC and Ryan White grants, Cotton said.

To shore up its funding, the organization will start charging a fee for some of the workshops and classes that it offers.

For its first minority male leadership summit planned for next month at the Union Station Hyatt, the group will charge a registration fee of $150. It expects 150 to 200 men from throughout the Midwest to attend.

A forum on same-sex marriages will have a $20 attendance fee. Also on tap is a charity walk commonly used by other nonprofit groups to raise money.

Cotton said that as a new leader, he is pushing aside past controversies and focusing on providing necessary services to the public.

"What happened in the past has happened. We cannot change that. We're in the process of rebuilding. There are a lot of things that need to be done."

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